Minister Rania A. Al-Mashat: Financing for Private Sector Should Be Doubled Amid Ukraine-Russia Conflict
As uncertainties reverberate across the world due to the Ukraine conflict, there is an urgent need to scale up development financing and ensure that the SDGs are put back on track. The Minister of International Cooperation and Governor of Egypt at the European Bank for Reconstruction and Development, H.E. Dr. Rania A. Al-Mashat, delivered a speech before the Board of Governors at the Bank’s headquarters in London, which comes after the approval of the new country strategy between Egypt and the Bank for the period from 2022-2027. At the beginning of her speech, the Minister of International Cooperation responded to inquiries from European Bank officials about her outlook on the Russian-Ukrainian crisis and its repercussions on emerging countries, as well as other economic challenges. Al-Mashat noted that the lessons learned during the COVID-19 pandemic can be replicated during the current crisis, as the COVID-19 pandemic has shown that unity and cooperation is crucial for the international community to withstand global shocks. She added that the current context will have a negative impact on investments by the private sector, which is why international financial institutions should double financing to the private sector. This also comes in light of the increasing attention paid to renewable energy as a replacement of soaring oil prices, and the private sector has played a key role in Egypt’s clean energy transition.
A notable example is the Benban Solar Park in Aswan, which is one of the largest projects of its kind in the region that includes contributions from the private sector. The power plants will generate up to 752 megawatts of solar power, supplying Egypt with clean, renewable energy and contributing to energy security in the region.
The Minister added that Egypt is preparing to host the United Nations Climate Conference COP27 and that it holds great ambitions to shift towards a green economy, noting the criticality of the partnership with the European Bank for Reconstruction and Development to channel funding for Egypt’s environmental objectives and green economy. She added that the Ministry of International Cooperation focuses on achieving integration of all partnership strategies with development partners through a country-led multi-stakeholder engagement framework to obtain the optimal level of development finance. She referred to the Ministry of International Cooperation role in combating climate change, as it acts on two fronts at the same time: mitigation and adaptation, and leverages global partnerships by capitalizing on efficient international cooperation to promote transfers of technology, finance and knowledge. During the meeting, EBRD officials hailed Egypt's ambitious structural reforms, and considered these reforms a model that other emerging countries should follow to fast-track their development. Sharing the lessons learned from Egypt’s experience for other emerging and developing economies, the Minister’s high-level meeting with the Board of Directors touched upon the criticality of three pillars: homegrown macroeconomic reforms, inclusive economic growth, accelerating the green transition, and fostering novel models of partnerships.
Egypt’s Homegrown Economic Reform The Minister delivered a speech in which she presented the lessons learned of the economic and structural reforms that have been expedited since 2016, which was in parallel with scaling up the social protection and social safety agenda. Takaful and Karama, for example, expanded from about 200,000 households to 2.3 million households, which includes 10 million people overall.
Egypt’s economic reform is characterized by openness, welcoming international cooperation and trade, which has spurred knowledge and technical exchange in technology and keeping the markets truly competitive. Reflecting the long-standing call for policy integration and policy coherence, Egypt’s Action Programme (2018-2022) helped fast-track the economy to address youth employment and unlock the economic potential of local businesses. Deepening Commitment to Inclusive Growth The Minister added that Egypt is deepening its commitment to inclusive growth, which has been mainstreamed across all partnership strategies, as explicated by the recent new country strategy with the European Bank for Reconstruction and Development (2022-2027). Egypt recently launched the first phase of the ‘Decent Life’ (Haya Karima) initiative, which aims to raise the living standards of 58 million Egyptians in more than 4,000 villages over three years at a cost of more than EGP 700 billion (about $44.6 billion). In this regard, she pointed to the importance of the bank's orientation to open regional offices in the governorates, and to start in the governorates of Alexandria and Ismailia, and its quest to expand soon in Assiut and Aswan, in a way that enhances integration in development efforts in all governorates, especially since Egypt is one of the largest operations countries in the bank and the largest in the southern and eastern region. average over the past four years. A Human-Centered Green Transition Referring to Egypt Vision 2030, the Minister noted that Egypt’s national strategies ensure that all stakeholders are working under a strategic umbrella to achieve a sustainable economy and a diversified Egyptian energy sector, which represents around 13% of current GDP. By identifying a set of targeted indicators to be reached by 2020 and 2030, calling for 20% of Egypt’s power generation to be based on renewables by 2022, and 42% by 2035, as per the country’s Integrated Sustainable Energy Strategy. Egypt also launched the National Climate Change Strategy 2050, and in light of its presidency of the United Nations Conference Climate Change this year (COP27), the role of development partners and the private sector has become crucial to mobilize development finance. A Thriving Entrepreneurial Economy Egypt has prioritized entrepreneurship, innovation and digitalization to future-proof the economy. The Ministry of International Cooperation plays a key role in achieving this through Egypt Ventures as well as international partnerships, whether multilateral or bilateral development partners. Egypt Ventures’ direct and indirect investments during 2021 were worth around 92 million pounds. The Egyptian government is also rising as a regional center for innovation and entrepreneurship in the Middle East and North Africa, with 75 million pounds direct investments in start-up companies, in addition to 17 million pounds indirect investments in business accelerators. Regional and International Partnerships The Minister of International Cooperation added that Egypt’s international partnerships are based on a comprehensive framework that is based on a holistic scheme of inclusive-green-growth nexus, which complements Egypt’s role as a regional leader in its transition to a green economy She added that the European Bank for Reconstruction and Development’s partnership is significant for its expansion in the African market and the Middle East. Recently, Egypt and the European Bank for Reconstruction and Development held a launching ceremony for the new country strategy for Egypt for the period 2022 to 2027, with the participation of a diversity of stakeholders from the government, the European Bank for Reconstruction and Development, the private sector, representatives of parliament, and civil society. The strategic partnership between the Arab Republic of Egypt and the European Bank for Reconstruction and Development dates back to 1991. Over the years 2018, 2019, 2020 and 2021, Egypt was the largest country of operations in the European Bank for Reconstruction and Development in the Southern and Eastern Mediterranean region, and the total investments of the Bank since the beginning of its operations in 2012 amounted to about 8.6 billion euros in 145 projects at the state level, of which 76% to finance the private sector and 24% to the public sector.